Microsoft debuts free tier in competitive workplace chat app market

Salvador Rodriguez

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SAN FRANCISCO, July 12 (Reuters) - Microsoft Corp on Thursday introduced a free tier of its workplace collaboration software Teams to better compete against rival Slack Technologies Inc in a market analysts view as a main battleground in the world of enterprise software.

Previously, businesses without Office 365 subscriptions that have wanted to try out Teams have been limited to a month-long trial. The free version of the product is intended to make it easy for potential customers, typically teams of workers and small businesses, to start using Microsoft's products and become embedded in them.

"We naturally want customers who are using the free version to upgrade to the full Office 365 version,” Lori Wright, general manager of Microsoft 365 Teamwork, told Reuters in a June 28 interview.

Microsoft has been competing with Slack since introducing Teams in early 2017. The product is used by 200,000 organizations, the company said in March. Slack in May said that Slack is used by 70,000 paying organizations.

The market is forecast to be worth $3.2 billion by 2021, according to research firm IDC.

Ahead of the Teams announcement, Slack on Tuesday announced improvements to its own chat app's search features that the startup said will make it easier for users to find messages. The improved search features apply to all versions of Slack and will roll out to users in the coming weeks, the company said.

While the free version of Teams will not offer the same functionality as the Office 365 version, it will include some features not offered in the free versions of Slack that could lure prospective customers, including unlimited search and unlimited app integrations.

"The goal is to get Teams to be used by as many people as possible," said Alan Lepofsky, analyst with Constellation Research. "While this could put pressure on Slack to lift their restrictions, it’s not that simple as they play a key part in Slack’s freemium to premium monetization." (Reporting by Salvador Rodriguez in San Francisco; Editing by Greg Mitchell and Grant McCool)